China Zhongwang : Announcements and Notices - Purchase of Aluminium Extrusion Production Equipment

207747 (China Zhongwang) Eng.indd

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 01333)

DISCLOSEABLE TRANSACTIONS PURCHASE OF ALUMINIUM EXTRUSION PRODUCTION EQUIPMENT

The Board is pleased to announce that on 22 June 2016, (1) Panjin Zhongwang, a wholly-owned subsidiary of the Company, entered into Panjin-Taizhong Contracts with Taizhong Binhai;

(2) Yingkou Zhongwang, a wholly-owned subsidiary of the Company, entered into Yingkou- Taizhong Contracts with Taizhong Binhai; (3) Yingkou Zhongwang, a wholly-owned subsidiary of the Company, entered into Yingkou-Heavymach Contracts with Sino-Heavymach, pursuant to which, Panjin Zhongwang and Yingkou Zhongwang agreed to purchase an aggregate of 99 sets of relevant manufacturing equipment from Taizhong Binhai or Sino-Heavymach, respectively, at a total consideration of RMB3,129,210,000.

Due to the same counterparty and similar transaction objects and nature of Panjin-Taizhong Contracts and Yingkou-Taizhong Contracts, these transactions shall be aggregated pursuant to Rule 14.22 of the Listing Rules. As the applicable percentage ratio for these transactions upon aggregation exceeds 5% but is less than 25%, such transactions constitute a discloseable transaction of the Company under the Listing Rules, and shall be subject to the reporting and announcement requirements but exempt from the shareholders' approval requirements under Chapter 14 of the Listing Rules.

Due to the same counterparty and similar transaction objects and nature of Yingkou-Heavymach Contracts, these transactions shall be aggregated pursuant to Rule 14.22 of the Listing Rules. As the applicable percentage ratio for these transactions upon aggregation exceeds 5% but is less than 25%, such transactions constitute a discloseable transaction of the Company under the Listing Rules, and shall be subject to the reporting and announcement requirements but exempt from the shareholders' approval requirements under Chapter 14 of the Listing Rules.

Given that Panjin-Taizhong Contracts, Yingkou-Taizhong Contracts and Yingkou-Heavymach Contracts are entered into based on normal commercial terms and in line with the day-to-day businesses of the Group, and that the considerations thereof are determined after arm's length negotiations, the Directors are of the view that the terms specified in these contracts are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

The Board is pleased to announce that on 22 June 2016, (1) Panjin Zhongwang, a wholly-owned subsidiary of the Company, entered into Panjin-Taizhong Contracts with Taizhong Binhai; (2) Yingkou Zhongwang, a wholly-owned subsidiary of the Company, entered into Yingkou-Taizhong Contracts with Taizhong Binhai; (3) Yingkou Zhongwang, a wholly-owned subsidiary of the Company, entered into Yingkou-Heavymach Contracts with Sino-Heavymach, pursuant to which, Panjin Zhongwang and Yingkou Zhongwang agreed to purchase an aggregate of 99 sets of relevant manufacturing equipment from Taizhong Binhai or Sino-Heavymach, respectively, at a total consideration of RMB3,129,210,000.

DATE

22 June 2016

PARTIES Panjin-Taizhong Contracts Seller: Taizhong Binhai Buyer: Panjin Zhongwang Yingkou-Taizhong Contracts Seller: Taizhong Binhai Buyer: Yingkou Zhongwang Yingkou-Heavymach Contracts Seller: Sino-Heavymach Buyer: Yingkou Zhongwang

As at the date of this announcement, to the best knowledge, information and belief of the Directors, upon making all reasonable enquiries, Taizhong Binhai and Sino-Heavymach, as well as their respective ultimate beneficial owners are third parties independent from the Company and any of its connected persons.

TRANSACTION OBJECTS AND CONSIDERATIONS Panjin-Taizhong Contracts

Pursuant to Panjin-Taizhong Contracts, Panjin Zhongwang agreed to purchase, and Taizhong Binhai agreed to sell, an aggregate of 41 sets of single-action and direct extrusion equipment of various specifications for aluminium extrusion products at a total consideration of RMB682,490,000.

Yingkou-Taizhong Contracts

Pursuant to Yingkou-Taizhong Contracts, Yingkou Zhongwang agreed to purchase, and Taizhong Binhai agreed to sell, an aggregate of 46 sets of single-action and direct extrusion equipment of various specifications for aluminium extrusion products at a total consideration of RMB1,570,900,000.

Yingkou-Heavymach Contracts

Pursuant to Yingkou-Heavymach Contracts, Yingkou Zhongwang agreed to purchase, and Sino-Heavymach agreed to sell, an aggregate of 12 sets of single-action and direct extrusion equipment of various specifications for aluminium extrusion products at a total consideration of RMB875,820,000.

Pursuant to Panjin-Taizhong Contracts, Yingkou-Taizhong Contracts and Yingkou-Heavymach Contracts, Panjin Zhongwang and Yingkou Zhongwang will purchase an aggregate of 99 sets of aluminium extrusion production line equipment at a total consideration of RMB3,129,210,000.

PAYMENT ARRANGEMENTS

As provided in Panjin-Taizhong Contracts, Yingkou-Taizhong Contracts and Yingkou-Heavymach Contracts, the payment arrangements between Panjin Zhongwang and Taizhong Binhai, Yingkou Zhongwang and Taizhong Binhai, Yingkou Zhongwang and Sino-Heavymach are as follows:

Advance payment: the Buyer shall pay the Seller 30% of the consideration under the Contracts as advance payment within a week after the execution of the contract.

Progress payment: the Buyer shall pay the Seller 30% of the consideration under the Contracts as progress payment within a week upon its confirmation on the completion of rough casting of relevant major pieces of equipment under the contract.

Delivery payment: the Buyer shall pay the Seller 30% of the consideration under the Contracts as delivery payment after it confirms the equipment under the contract is ready for delivery.

Retention monies: the Buyer shall pay the Seller 10% of the consideration under the Contracts as retention monies within a week upon the expiration of the warranty period and the confirmation of no quality problems in the equipment.

WARRANTY

Warranty period shall be 12 months commencing from the date on which the Buyer confirms the completion of the installation and commissioning of the equipment with the Seller.

Warranty periods for certain special components are subject to the special provisions separately set out in Panjin-Taizhong Contracts, Yingkou-Taizhong Contracts and Yingkou-Heavymach Contracts.

REASONS FOR AND BENEFITS OF ENTERING INTO EQUIPMENT CONTRACTS WITH TAIZHONG BINHAI AND SINO-HEAVYMACH

The Group is a leading industrial aluminium extrusion product developer and manufacturer in the world, which is currently principally engaged in the production of high precision, large-section and high value-added industrial aluminium extrusion products that are widely used in the transportation sector (including railway carriages and cargo carriages, metropolitan rails, automobiles, commercial vehicles, vessels, aviation and aerospace), machinery and equipment and electric power engineering sectors. The purpose of purchasing the equipment is to optimize and expand the aluminium extrusion capacity of the Group, thereby further meeting the increasing market demands.

Given that Panjin-Taizhong Contracts, Yingkou-Taizhong Contracts and Yingkou-Heavymach Contracts are entered into based on normal commercial terms and in line with the day-to-day businesses of the Group, and that the considerations thereof are determined after arm's length negotiations, the Directors are of the view that the terms specified in these contracts are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

Due to the same counterparty and similar transaction objects and nature of Panjin-Taizhong Contracts and Yingkou-Taizhong Contracts, these transactions shall be aggregated pursuant to Rule 14.22 of the Listing Rules. As the applicable percentage ratio for these transactions upon aggregation exceeds 5% but is less than 25%, such transactions constitute a discloseable transaction of the Company under the Listing Rules, and shall be subject to the reporting and announcement requirements but exempt from the shareholders' approval requirements under Chapter 14 of the Listing Rules.

Due to the same counterparty and similar transaction objects and nature of Yingkou-Heavymach Contracts, these transactions shall be aggregated pursuant to Rule 14.22 of the Listing Rules. As the applicable percentage ratio for these transactions upon aggregation exceeds 5% but is less than 25%, such transactions constitute a discloseable transaction of the Company under the Listing Rules, and shall be subject to the reporting and announcement requirements but exempt from the shareholders' approval requirements under Chapter 14 of the Listing Rules.

GENERAL INFORMATION

1. Panjin Zhongwang

   Panjin Zhongwang, a limited company incorporated under the PRC laws and an indirect wholly-owned subsidiary of the Company, is mainly engaged in the manufacturing and sale of aluminium products.

2. Yingkou Zhongwang

   Yingkou Zhongwang, a limited company incorporated under the PRC laws and an indirect wholly-owned subsidiary of the Company, is mainly engaged in the manufacturing and sale of aluminium product.

3. Taizhong Binhai

   Taizhong Binhai, a limited company incorporated under the PRC laws and a subsidiary of Taiyuan Heavy Industry Co., Ltd., is mainly engaged in the manufacturing and sale of heavy machinery equipment including lifting equipment, forging and pressing equipment, pressure vessel and so on.

4. Sino-Heavymach

Sino-Heavymach, a limited company incorporated under the PRC laws and a subsidiary of China National Machinery Industry Corporation, is mainly engaged in comprehensive equipment and technology research and development, design and manufacturing for various industries such as metallurgy and heavy equipment manufacturing.